Mumbai, Aug 03: The surge in foreign exchange reserves, projected to cross US dollar 100 billion by next year, is expected to lead to further appreciation in value of Indian rupee by about two per cent to Rs 45.25 against USD by March 2004, according to Citigroup. "India's foreign exchange reserves have grown by over USD 33 billion and do not see any threat to the key drivers of reserves including remittances, software exports in the next year or so, taking reserves to $100 billion", Citigroup said in its India Economic Strategy report.
"Given the liquidity issues, inability to cut rates by more than 0.5 per cent and need to contain inflation in the election year (2004), the odds lie in favour of appreciation", Citigroup said adding, the Indian rupee is expected to touch value of Rs 45.25 against USD by March 2004 (Reserve Bank of India rate as on August one, 2003 being Rs 46.16 to a dollar).

According to the latest RBI data, the foreign exchange reserves stood at about $84.9 billion.
Despite sterlising nearly 70 per cent of forex inflows, there was surplus liquidity and prices could rise in light of growth in output trends, Citigroup said.
On the growth in gross domestic product (GDP) for 2003-04, the banking group said better-than-expected agri production and rise in the industrial production would help economy to grow at 6.3 per cent.
The good agriculture output due to healthy monsoon would ease the current pressure on the prices of primary products. Along with lower oil prices, this would bring down inflation to four per cent level, Citigroup added. Bureau Report